When you're No. 2, you're always looking for ways to improve your stature. Freddie Mac's response has been to unveil Gold Rush, a program that allows lenders to make mortgage swap settlements overnight - three days faster than secondary market competitor Fannie Mae.
Freddie Mac unveiled Gold Rush at the 80th Annual Mortgage Bankers Association Conference in Chicago Oct. 26 to 28, and boasts that it will shave two days off the fastest loan swap now on the market - Fannie's Flash Major program.
The new service will be available for swap settlements of all fixed-rate and balloon/reset loans beginning Jan. 14.
"Flash Major has four-day return time," said Dave Boberg, senior vice president with Norwest Mortgage Inc., Des Moines, Iowa. "So this program does improve Freddie's execution."
Boberg said that the new program might attract some people away from Fannie's system, but it would depend on whether the lender recognized the increased value. "Some may switch over," he said, "but it may not add enough value to make them stay - we'll see."
The new service will be fast and flexible, Freddie Mac said. "Customers can apply the additional days Gold Rush offers at any point in the lending process - whenever they are most helpful." Raybould sad. "Additionally, they can choose a settlement date and processing timeline to fit their needs."
"I think its a good program," said Kevin W. Bartlett, managing director of Countrywide Funding Corp.'s capital markets division, who was introduced to the program during the conference. "It used to be that if you were a mortgage-backed securities or participation certificate issuer, the old way of getting [a MBS] back would take four days for Fannie and five days for Freddie. What made it rough was that in that time you had your financing and capital all tied up - this program allows you to get it back sooner."
Bartlett said that another attractive part of the program was that the quick turnaround allows secondary market lenders to get their bonds back more quickly, make a Public Securities Association registration date and sell it in the settlement month.
"We plan to use it right away," Bartlett added, "Just as soon as we can make a few operational changes.
But while the program has received a warm welcome from many mortgage bankers, it could have a perceived downside, Bartlett said. Some lenders may find the program less attractive because the securities Freddie issues are generic multi-lender securities.
In some cases, however, more specified securities - such as pools that are located within one region or are issued by a single lender - are of greater value to some investors.
That however, depends on the investor, he said. Many investors like pools that are more geographically diverse.